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Americans Paying too Much for their Mortgages?

by Tim Hart

American home owners are missing out on lower mortgage payments according to Freddie Mac’s Primary Mortgage Survey. Mel Watt, head of the Federal Housing Finance Agency, has gone on tour throughout the country, in order to spread awareness on the benefits and risks of refinancing their home. Mortgage rates hit their lowest level in years, at 4.1%, supporting the fact that now may be the time to refinance.

Home owners have had a chance during the recession to refinance through the Home Affordable Refinance Program (HARP), but now many Americans assume that HARP no longer applies to them. However, Mel Watt disagrees. Any homeowner who owes more money than their house is worth will struggle to find any lender who is willing to refinance. The HARP program makes this possibility much more likely. Mel Watt believes that almost 800,000 Americans are missing their opportunity to save serious money on their mortgage. In some cases, specific borrowers have used HARP to save $200 a month.

Please make sure to consider the potential benefits and drawbacks of refinancing a home. Also make sure to re-check your credit to see if it has improved since you took out the loan as you may receive better rates.

Source: http://www.realtor.com/news/800000-homeowners-missing-lower-mortgage-payments/

Mortgage Rates Hit Lowest for 2014

by Tim Hart

After mortgage rates dropped in the U.S. for the second week in a row, borrowing costs hit their lowest rate yet for 2014. This week, the average rate shifted from 4.12% to 4.1% for a 30 year fixed mortgage. Although the percentage shift may be small, when added up over 30 years, even the smallest changes can greatly impact the cost of home ownership. A 30 year rate has not been this low since the end of October last year. 15 year mortgages also saw price reductions, slipping from 3.24% to 3.23% this month. The 30 year rate has been consistently declining since it had hit a two year high of 4.58% last August. Experts foresee the lower rates supporting and fostering home demand. July trends support these expert’s claims, as previously owned homes sold at an annualized rate of 5.15 million this July, up 2.4% from June. The longer the rates stay low, the more activity can be expected in the future of the US housing market.

Source: http://realestate.msn.com/blogs/post--mortgage-rates-hit-new-2014-low

Breaking Down Credit Score & Mortgage Rates

by Tim Hart

 

History has shown that the best way to predict a person’s behavior over the near-term future is to look at that person’s behavior in the recent past. It’s a concept similar to the First Rule of Physics — an object in motion tends to stay in motion.

This basic concept applies itself to predicting an individual’s spending habits as well. Precedent shows that a person who regularly pays their bills will continue to pay their bills on time in the foreseeable future. Your credit score therefore is based upon a person’s predicted spending habits based upon past performance. Specifically, to mortgage lenders, your credit score is your probability that you will pay your mortgage on time for the next 90 days. Higher credit scores correlate with lower risk. Transversely, low credit scores are associated with a high risk and that is why lower credit scores receive a higher mortgage rate.

Mortgage lenders use a credit model known as FICO. It is your FICO score that impacts the mortgage rate a person is eligible for. FICO is paired with the newly implemented LLPA (Loan-Level Pricing Adjustment) that was put in place due to the major mortgage market losses in 2008. LLPA are ‘discount points’ applied to a mortgage rate based upon the borrower’s level of risk. Here is an example:

Assuming a 20% downpayment, look at how discount points change based on credit score. Fees get massive for FICOs under 700.

740+ FICO  : There are no discount points required. This loan is “low risk”.

720-739 FICO :  0.250 discount points are charged to the borrower, or $250 per $100,000 borrowed

700-719 FICO :  0.750 discount points are charged to the borrower, or $750 per $100,000 borrowed

680-699 FICO :  1.500 discount points are charged to the borrower, or $1,500 per $100,000 borrowed

660-679 FICO :  2.500 discount points are charged to the borrower, or $2,500 per $100,000 borrowed

For more details: EMAIL ME!

Source: http://pro.truliablog.com/buyers/better-mortgage-rates-start-with-better-fico-scores-2/

Improved Job Statistics Propel Mortgage Rates Up

by Brittney Dahlberg

Improved Job Statistics Propel Mortgage Rates Up

1-Year ARMs: hold as an average of 2.9%. A year ago the 1-year ARM averaged at 3.4%

5-Year ARMs: found a mean of 3.06% this week. A year ago, a 5-year ARM was at 3.47%

15-Year FRMs: averaged at 3.37% as compared to last year’s 3.72%

30-Year FRMs: 4.12% is the average this week in contrast to 4.27% last year!

ARMs (adjustable-rate mortgages) and FRMs (fixed-rate mortgages) are important indicators for potential buyers who are on the threshold of buying. 30-year financing options are the most popular according to Freddie Mac.

“An employment report that was better than market expectations helped to lift long-term Treasury bond yields and mortgage rates as well,” Frank Nothaft, Freddie Mac’s chief economist, notes. In September, the economy added 103,000 workers; however, the unemployment rate still remained high at 9.1 percent.

Record lows have been being seen across the board over the last month with future projections of staying well below 5% through 2013.

If now is the time for you to buy, CLICK HERE

http://realtormag.realtor.org/daily-news/2011/10/14/improved-job-report-sends-mortgage-rates-higher 

Displaying blog entries 1-4 of 4

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